Dec. 27 (UPI) — The impact from President Donald Trump‘s recently-enacted tax overhaul will “be favorable” to oil company Shell, it said Wednesday — as Barclays bank is set to take a $1.2 billion hit from the new law that will push it into the red.
Royal Dutch Shell said it expects change, which lowers the corporate tax rate from 35 percent to 21 percent, will affect the company’s fourth-quarter results.
Estimates by Shell say the overhaul could amount to between $2 billion and $2.5 billion, stemming from a decrease in the value of deferred tax assets.
Companies can log deferred assets during unprofitable periods and later use them to offset tax payments — but the assets are worth less on paper, now that the tax overhaul reduced the rate.
Barclays Bank, meanwhile, is looking at similar changes in the value of its deferred tax assets and liabilities — and said it will take a noncash charge of $1.3 billion in the fourth quarter, which is expected to push the bank to a loss for the year.
Shell and Barclays said that despite big paper losses, the drop in U.S. corporate taxes will be positive in the longer run.